Washington Insider-- Friday

Support for US Involvement in Southeast Asia

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Report: Brazil Likely To Extend Zero Tariffs On Ethanol Imports For Three Months

The Brazilian government is expected to revive and extend the effort to allow imports of ethanol for three months with the Brazilian sugar industry seeking negotiations between the two countries to allow more sugar exports to the U.S., according to two sources knowledgeable with the plan, Reuters reported.

The sources said Brazilian President Jair Bolsonaro and Agriculture Minister Tereza Cristina met with the sugar ethanol industry Tuesday on the package. Brazil let a non-tariff quota for 750 million liters (198 million gallons) ethanol imports expire at the end of August, making imports subject to a 20% tariff.

And the country's sugar industry said that they want the Brazilian government to seek additional access for Brazilian sugar into the U.S. market. While some may reject that possibility, recall that USDA wants to allow more sugar into the U.S. under the Fiscal Year 2020 tariff rate quota on sugar imports, and they have extended the period for the products enter by 30 days.

USDA Sets Seafood Trade Relief Program (STRP) Details

USDA will launch signup for the Seafood Trade Relief Program (STRP) September 14 to make up to $530 million in payments to eligible commercial fishermen that have been “impacted by trade actions of foreign governments resulting in the loss of exports.” Payments under the program are aimed at “expanding or aiding in the expansion of domestic markets for U.S. caught and sold seafood.”

Payments under the program are to be made using authority under the Commodity Credit Corporation (CCC) and apply to seafood production reported as harvested in calendar 2019. USDA said that trade damages of more than $5 million were required for the type of seafood to be eligible for an STRP payment. There is a $250,000 payment limit per person or legal entity. Only those commercial fishing operations in business at the time of application are eligible.

USDA used the same methodology to determine damages under STRP as they did for the Market Facilitation Program (MFP) and Food Purchase and Distribution Program (FPDP).

The Notice of Funding Availability (NOFA) for STRP is scheduled to be published in the Federal Register on September 14.


Washington Insider: Support for US Involvement in Southeast Asia

Bloomberg is reporting this week that the United States is pushing Southeast Asian countries to review ties with Chinese state-owned enterprises and it is stepping up pressure on Beijing over territorial disputes in the South China Sea.

“Don't just speak up, but act,” U.S. Secretary of State Pompeo told participants during a virtual summit with foreign ministers of the Association of Southeast Asian Nations (Asean) on Thursday. “Reconsider business dealings with the very state-owned companies that bully Asean coastal states in the South China Sea.”

Tensions in the region have risen in the past few months as the U.S. and China spar on everything from democracy in Hong Kong to data security over popular Chinese apps TikTok and WeChat. In July, the U.S. explicitly rejected China's expansive maritime claims in the region for the first time and sent aircraft carriers to the waters to conduct military exercises.

The report noted that China last month fired missiles into the South China Sea, a move that underscored the growing cost of any armed conflict in the region. The missiles showed China's ability to strike out at U.S. bases and aircraft carriers, the major sources of American power projection in the region.

Pompeo's remarks came after the U.S. last month announced trade and visa restrictions on 24 companies for their efforts to help China “reclaim and militarize disputed outposts” in the contested maritime area, including the prominent state-owned China Communications Construction Co., a critical builder of “Belt and Road” initiative projects.

During the meeting, Pompeo raised concerns over the China's actions in the South China Sea, reiterating that the U.S. regarded Beijing's expansive maritime claims in the waters as unlawful according to a 2016 international tribunal ruling. China regards the U.S. position as illegitimate because it opted out of dispute settlement provisions when it signed up for United Nations Convention on the Law of the Sea.

“I know many of you were skeptical about the Trump administration and our intentions when we took office,” he said. “You should have confidence that America will be here in friendship to help you, just as we've been for the last three and a half years.”

Secretary Pompeo said that the United States is committed to working with partners in the Indo-Pacific to uphold the rules-based order that has underpinned security and prosperity for more than 70 years.

Bloomberg also noted that Vietnam's top diplomat declared that Southeast Asian countries want the U.S. to play a role in maintaining peace in the South China Sea, pushing back against Beijing's comments that American forces were destabilizing the region. Vietnam currently holds the bloc's rotating chairmanship.

“We welcome the U.S.'s constructive and responsive contributions to Asean's efforts to maintaining the peace, stability and developments in the South China Sea,” Vietnam Foreign Minister Pham Binh Minh said during the summit. Without naming China, he said the militarization of the sea “eroded trust and confidence, increased tensions and undermined peace, security and rule of law in the region.”

Southeast Asian countries were open to opportunities for practical cooperation with the U.S. in the region, Minh said. Vietnam, the Philippines, Brunei and Malaysia have been locked in territorial disputes with China that have impacted their ability to extract fish, oil and gas from offshore areas.

At a virtual summit a day earlier, Chinese Foreign Minister Wang Yi told Southeast Asian foreign ministers the U.S. was intervening in territorial disputes and strengthening its military deployment in the contested area “out of its own political purposes.” He called the U.S. “the biggest driver of militarization of the South China Sea,” according to statements posted by China's Foreign Ministry.

The U.S. has become “the most dangerous factor that damages the peace in the South China Sea,” Wang said, reiterating China's position that disputes should be solved by regional countries. “Peace and stability are China's greatest strategic interest in the South China Sea, which are also the common aspiration of Asean countries,” he said.

On Wednesday, Wang rejected the idea that China pursues expansionist claims, calling it a “distortion” of China's stance. He insisted China's claim of islands in the South China Sea has “abundant historic and legal basis.”

He also argued that Chinese construction on reefs and islets was meant to improve living conditions and provide “public good” for the region. “In the face of a non-regional country's military pressure, of course we have the right to protect our own sovereignty,” he said.

So, we will see. The U.S. policy of pushing back on Beijing's role in the region is a key part of its overall efforts to oppose global Chinese investment expansion – even while The U.S. expands its Chinese trade in ag products and a few other sectors. China is a growing competitor in the region and a challenging trading partner, a relationship U.S. producers should watch closely as it evolves, Washington Insider believes.

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